US banking giant JP Morgan has seen its stock find support after the recent problems in the banking sector.
JPM – Daily Chart
JPM stock has seen a strong rally above the support level at the $128.42 level, and traders can look for the long side if they believe that the crisis is now contained. There is also the opportunity to go short if the stock reverses below that level.
The larger US banks, such as JP Morgan, have seen a spike in deposits after the recent troubles at regional banks. Bloomberg News said Rival Bank of America took in more than $15 billion in new deposits over a few days.
However, Larry Fink, CEO of the largest asset manager Blackrock, believes there may be more “dominoes to fall.”
Temporal Spike In Deposits For Larger Banks
“It’s too early to know how widespread the damage is,” Fink said in an annual letter.
“The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge. Will asset-liability mismatches be the second domino to fall?”
Fink said the recent crisis was “the price to pay” for years of easy money. The Fed’s move to ramp interest rates up saw Silicon Valley Bank taking a $1.8bn hit which it could not recover from. Other regional banks may have the same problem. There will now be a potential liquidity crisis as customers flee to larger banks. Traders should keep an eye on the situation. JPM is seen as a safe haven but could see significant selling on a larger crisis developing.
After Sunday’s emergency measures from regulators, JP Morgan said that the Fed’s Bank Term Funding Program (BTFP) may inject up to $2 trillion into the US banking system.
